02 - Chapter 2 Why People Commit Fraud MULTIPLE CHOICE 1....

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 2 Why People Commit Fraud MULTIPLE CHOICE 1. Which of the following is not a common rationalization of fraud perpetrators? a. The organization owes me b. I'm only borrowing the money c. No one will get hurt d. All of the above are common rationalizations for fraud. ANS: D D: All of the above answers are stated in the text as common rationalizations for committing fraud. In addition to those listed in the question and the text, countless other rationalizations exist for commit- ting fraud. 2. Which of the following is not a control activity? a. Dual custody b. Systems of authorization c. Internal audit department d. Documents and records ANS: C A: Dual custody, or segregation of duties is a control activity. B: System of authorization is a control activity. C: Internal audit department is part of the control environment and is not a control activity D: Documents and records are control activities-they produce an audit trail. 3. Each of the following is an example of an inadequate control environment EXCEPT: a. The HR department failed to check an applicant's background and hired someone who had committed fraud in the past. b. A manager instructs employees not to share passwords, and then shares her passwords with others. c. A company does not establish codes of conduct and does not have training meetings to teach employees to distinguish between acceptable and unacceptable behavior. d. The employees know who has responsibility for each business activity. ANS: D D: A clear organizational structure is an important fraud-deterring element. It is easier to track miss- ing assets and money when all employees know exactly who is responsible for each business activity. 4. Most fraud perpetrators: a. Have little education b. Have a criminal record. c. Are new to the company d. None of the above ANS: D D: Fraud perpetrators are educated, often have no criminal history, and have often been with the com- pany for many years. 5. Work-related pressures that people use to justify their actions include: a. Dissatisfaction with their job b. Believing that they are underpaid
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
c. Forced to work too many hours d. All of the above ANS: D D: Correct. A, B and C are all work-related pressures that people use to justify their actions. 6. Which of the following is not one of the key elements common to all frauds? a. Perceived pressure b. Perceived inequality c. Perceived opportunity d. Rationalization ANS: B A: Incorrect. This is a key element common to all frauds. B: Correct. C: Incorrect. This is a key element common to all frauds. D: Incorrect. This is a key element common to all frauds. 7. What is the most important element in a control environment? a. Management's communication b. Management's role and example c. The hiring process d. The internal audit department ANS: B A: A is incorrect because although management communication is critical, it is not the most important element in the control environment. Management's role and example are the most important elements
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 01/31/2011 for the course ACCT 345 taught by Professor N/a during the Spring '10 term at Mountain State.

Page1 / 13

02 - Chapter 2 Why People Commit Fraud MULTIPLE CHOICE 1....

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online